viewAmphion Innovations PLC

Amphion Innovations sees signs of life in IPO market, IP licensing revenues "improve markedly"


Amphion Innovations (LON:AMP) provided a trading update for 2010 today, noting that while the year was “extremely challenging”, it is now beginning to see signs of life in the IPO market.

As was indicated in the interim results, the company has decided to adopt a different approach to valuation of certain individual holdings, given the length of time since the last outside financing event, which has historically been the basis for calculating values.

In instances where the length of time together with conditions in the market and at the investee company required an adjustment to the price of the recent investment, Amphion discounted the investment.

As a result, the Company expects to show a decrease in net asset value (NAV) in sterling to £0.15 being $0.23 as at 31 December 2010 (£0.26 and $0.42 as at 31 December 2009).

In absolute terms, 15 pence per share equates to a total NAV of £20 million.

Amphion's total revenue fell by 53% to $4.09 million in 2010, reflecting the shortfall in the licensing programme revenue.

As a result, gross profit was US$3.08 million.

The loss from operations increased from 0.9 million to US$1.9 million despite a significant reduction in administrative expenses, which fell from US$6.68 million to US$4.96 million in 2010.

Amphion's wholly-owned subsidiary, DataTern, Inc., signed additional non-exclusive intellectual property license agreements with 9 leading international companies over the year, bringing the total number of licensees of the ORM technology to 27.

Since the year end, DataTern has concluded an additional 3 licenses, having generated US$0.85 million in revenue so far in 2011.

Amphion noted that despite the success of this programme, only about US$1 million of value is shown on its balance sheet.

The underlying economics of the intellectual property (IP) licensing programme have improved sharply as a result of a restructuring that Amphion called “extremely disruptive” with adverse consequences for the flow of settlements and revenue.

The programme saw a resumption of activity in the last two quarters of 2010, continuing into the first part of 2011.

Ampion said that revenues generated by the programme in the second half of 2010 improved markedly.

“We remain confident in the strength of the key ORM patents and believe we should continue to see progress in the programme in the months ahead,” said chief executive officer of Amphion Innovations Richard Morgan.

Amphion has recently reached an agreement to conclude a significant round of financing of its partner company Motif BioSciences with US$15 million of total capital being committed to Motif, part of it in equity financing and part of it in partnership financing of the company's programmes.

Amphion's percentage ownership in Motif is expected to increase as a result of the conversion of loan capital to equity.

The company said that its main challenge was to secure sufficient capital to support its partner companies and that while there are signs of improvement, the recovery was unlikely to be rapid of broad.

“One key goal remains to achieve an IPO or other realization of one or more of our partner companies and we continue to believe that some of our companies should be able to approach the IPO market as and when it revives,” said Morgan.

The company said that as it expected, the environment remained very difficult over the past five months, although “we are just beginning to see the first signs of life in the IPO market”.

“This is the key to a more active and supportive market for financing of private technology and medical technology companies,” said Amphion.

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